Pros And Cons Of Credit Monitoring Services

Identity theft is a complex problem and one that we're relatively powerless to prevent. Who knows how many government entities, doctors' offices, credit card companies and other entities have sensitive information, like our Social Security numbers, addresses and mothers' maiden names? How can we trust every person who has access to the paper and electronic records containing that information, to keep it safe from criminals? How do we know that some of the people who are authorized to access this information aren't criminals themselves?

This is where credit monitoring comes in; a seemingly tidy solution to the problem of stolen sensitive information. For around $10 to $15 a month, credit bureaus, banks and other financial services companies promise to keep an eye out for signs of potential fraud.

What Credit Monitoring Services OfferHere are some of the protections credit monitoring services say they offer.

Experian Credit Tracker Credit Monitoring, a $14.95 per month service, checks each of your three credit reports daily and emails you if anything changes. It only grants you access to your Experian credit report and score, however. The company also offers a $50,000 guarantee of identity theft expense reimbursement and access to a fraud resolution specialist, if your identity is stolen.

For identity theft protection, consumers can purchase a service for $12.95 per month from Experian, that provides access to your Experian credit report (but not score), the same monitoring and email notification service, daily internet scanning for unauthorized use of your Social Security number, debit and credit cards, $1 million in identity theft insurance and several other protections. The insurance is supposed to cover expenses such as lost wages, private investigator services and legal fees that you incur, if your identity is stolen. (For additional reading, check out: Do You Understand Your Credit Score?)

Citi Identity Monitor, at $12.95 per month, checks your credit file every business day and notifies you of any changes, provides services for fraud and identity theft victims and reimburses expenses associated with identity theft, up to $25,000. Its coverage is open to anyone, not just Citibank customers, and applies to all of your credit cards and bank accounts, not just ones you might have with Citibank.

Secure Identity Systems calls itself "the most comprehensive program available to protect you and your family from identity theft." It goes beyond credit monitoring to look at Social Security, public records, real property records, phone databases and postal service databases to look for signs of identity theft. The company also provides phone assistance to help with identity recovery and reimburses up to $25,000 in expenses incurred from cleaning up after an identity thief. The company offers a number of pricing plans, based on enrollment terms and the number of people to be covered.

Can Credit Monitoring Services Deliver?Consumer advocates, including Consumer Reports, have stated that credit monitoring services are not a good use of consumers' money, because they are inadequate at protecting against identity theft.

Here are some types of theft that credit monitoring won't alert you to:

Another shortcoming of credit monitoring is that it can't prevent the theft from happening in the first place, it can only notify you that it's already happened. Also, most programs' expense reimbursement offers don't apply if your identity is stolen before you sign up for the service, even if you're completely unaware of the theft. In addition, the Consumer Federation of America says that no identity theft protection service can provide complete protection.

The Bottom LineIdentity thieves operate in many ways. Some belong to organized crime, some use fake checks with real account information and some steal information online, via security breaches, social engineering scams and hacking. Unlocked mailboxes and wallets remain prime targets for low-tech criminals, and smartphones create further opportunities for ID theft.

Though you can get your credit report for free once a year from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion), a lot can happen in a year and the three reports do not always contain identical information, making it possible to miss an important red flag, if you only check each report once a year.

Credit monitoring, when combined with identity monitoring, can offer an added layer of protection, but consumers should weigh the ongoing costs of these programs against their benefits, and be aware that all products have shortcomings. Consumers can take extra steps to further protect their identities, but there is no foolproof system for preventing or catching this crime. (For additional reading, check out: Free Credit Reports And Credit Scores That Aren't Free.)